Do Custom Solutions Cost More than Packaged Solutions?

The truth is a packaged solution could cost significantly less than a custom initially. For example software like Xero has had many hours of development and would have cost millions of dollars to develop. The same for software like Microsoft Word, etc.

Packaged solutions are cheaper for you to purchase because they spread the cost over a number of users, with custom software the solution is just for your organisation so there is no way to distribute the cost (unless you get a conglomerate together).

The trades offs are, the solution may not do everything you need or might force you to work differently to how you do things now.

There are packaged solutions out there that are just shells and the customer buys the solution then pays for changes to the package. This might be a way to get a solution specific to your needs but we have found the cost of these can be as much (if not more) than building a specific custom solution for your needs.  Solutions like SAP are like this. They are sold as packages but basically, they build you a system again by customising the software.

You might find that some significant functionality is missing from the packaged solution. The answer might be to get them to customise the solution for your needs but the developers of the solution will be looking at all customizations and wondering if they are of use to all their customers. They may either charge you a lot for the customization or not do it because it’s not part of their strategy. So make sure they are open to customisation when your business grows and needs it.